In the dark forest of cryptocurrency, where there is no day or night, every transaction flickers like fireflies, attracting countless eyes chasing after wealth. But few realize that these seemingly active trading data may just be a meticulously staged puppet show — and the puppeteers are those market makers who should maintain market order.
By the end of summer 2024, Emirati market maker CLS Global staged a stunning market scam using 30 crypto wallets on the "NexFundAI" project. Like a casino cheat, they fabricated $600,000 in fake trading volume through 740 self-buy and self-sell wash trades. Ironically, this scam was actually a "market service" paid for by the "NexFundAI" project team themselves.
I. Market Makers Turned Market Manipulators
Imagine this: you walk into a bustling casino, with excited players surrounding every gambling table. But as you get closer, you realize that the rising and falling shouts are actually the same person playing different roles — this is the trick played by CLS Global.
They controlled the robots with algorithms, making 30 crypto wallets exchange the "NexFundAI" tokens back and forth like ping pong. These transactions seemed lively, but they were just tricks of left hand passing to right hand. 98% of the trading volume is like a mirage, attracting uninformed investors to jump into this trap one after another.
"It's like opening a restaurant in the wilderness," a crypto analyst vividly compared, "hiring a crowd to queue at the door to create popularity, only to find that the kitchen has no real stove when real diners come in."
II. The SEC's Fatal Blow
When U.S. SEC investigators uncovered the scam, they used a trump card: declaring that "NexFundAI" is not an ordinary cryptocurrency but an investment contract regulated by securities law.
This ruling was like putting a tight restraining order on CLS Global. According to the Howey Test established 80 years ago, any investment promising returns through the efforts of others falls under the category of securities. The "AI excess returns" promoted by "NexFundAI" directly hit this mark.
"It's like someone selling illegal lottery tickets online," explained an SEC official, "no matter what trendy name they give the lottery, it doesn't change the nature of gambling."
III. Who is Swimming Naked in the Crypto Market?
The CLS Global incident is just the tip of the iceberg. Remember the Bitwise report from 2023? That shocking analysis pointed out that 65% of Bitcoin market trading volume might be inflated. These fake transactions are like inflatable toys in a pool, making the entire market look lively, until the tide goes out, revealing who is swimming naked.
Identifying these scams actually follows a pattern:
· A certain token suddenly sees a surge in trading volume, but the bid-ask spread is abnormally small.
· A sudden surge of comments on social media claiming "this project is guaranteed to profit."
· On-chain data shows that large transactions come from similar groups of addresses.
IV. The Darkness Before Dawn
This farce ultimately ended with a heavy strike from the SEC, but the insights it leaves us go far beyond that. The cryptocurrency market is like a teenager, full of vitality yet easily led astray. Regulatory intervention is not meant to stifle innovation but to equip this market with brakes and a steering wheel.
For ordinary investors, remember a simple principle: if an investment opportunity seems too good to be true, it probably is. In the dark forest of the crypto world, the brightest flames may not guide you out; sometimes, they are just bait set by predators.
After all, in this new world dominated by algorithms and robots, the most expensive tuition is often naivety.